How Much Does It Cost to Start a Shisha Charcoal Factory in Indonesia

My name is Greg, and in this article, I will explain how much it will cost to build a good shisha charcoal factory in Indonesia in 2026.

I have 10+ years of experience in manufacturing and exporting shisha charcoal. The first factory I built in 2018; since then, I have expanded it into 4 factories, so I have firsthand experience of how it works and how much it costs in Indonesia.

How much money you can earn from a shisha charcoal factory, I already explained; let’s move on to building the factory.

Let’s assume we are building a factory capable of producing up to 150 tons of charcoal per month. It is 7.5 tons per working day, with 20 (actual) working days per month.

If you are costing a full operation that starts from raw coconut shell and carbonises its own charcoal, add carbonisation kilns, a shell supply chain, and emissions handling. Those are not in any table below, and the difference is not small.

Table 1 Basis of the estimate

Parameter	Value	Note
Target output	150 t/month
Working days	20/month	Not 22, not 30 — see below
Daily output	7.5 t/day	150 tons ÷ 20 days
Container equivalent	6–8 containers/month	≈ 18.75–25 t per container
Loading rhythm	~2 containers/week
Floor space	2,000–3,000 m²	Costed at 3,000 m²
In-process moisture	15–20%
Finished moisture	3–4%
Drying time	60–90 hours (Magelang)	~4 days incl. loading/unloading

Why only 20 working days? In my experience, it is next to impossible to run a full calendar month. Holidays — especially Eid, where the end of Ramadan costs you almost two weeks every year. Maintenance. Equipment upgrades. Building repairs. Power cuts. And plain absence of raw coconut shell charcoal in the market.

That last one matters more than people expect, and it is the reason the working capital section below is not optional reading.

Total CAPEX summary

Anyway, 150 tons is 6-8 containers per month, meaning you have to load 2 containers per week. And you can make from 15000 to 30000 USD of profit every month.

Let’s assume we have a building and land for the operations. So what do we need (as a minimum to start):

Ok, let’s start calculating our CAPEX for making a shisha charcoal factory.

Table 2: Capex Summary

#	Item	Cost (IDR)	Cost (USD)	Basis
1	Production line	Rp 400–600 M	$23,500–35,300	Rotary kiln, crusher, mixers, blenders, extruders, cutters, conveyor, motors, 3-phase wiring
2	Drying ovens	Rp 250–500 M	$14,700–29,400	5–10 ovens × Rp 50 M (Rp 30 M burner + Rp 20 M walls & controls)
3	Trays	Rp 850 M–1.02 B	$50,000–60,000	~1,000 trays per 5 t oven @ Rp 100k each, plus spares
4	Electricity connection	Rp 170–200 M	$10,000–11,800	PLN 3-phase transformer Rp 150–200 M + cabling
5	Office, laboratory, packing	Rp 170–255 M	$10,000–15,000	Packing tables, pallets, office, sanitation, lab equipment
6	Licensing & documents	Rp 68–270 M	$4,000–16,000	See Section 2 — range depends on land zoning
7	Building (LGS, 3,000 m²)	Rp 2.25 B	$132,000	3,000 m² × Rp 750k/m² incl. concrete floor
	Total excluding building	Rp 1.91–2.85 B	$112,000–167,000	If you already own land and building
	Total including building	Rp 4.16–5.10 B	$245,000–300,000	Greenfield on owned land

The two totals are given separately on purpose. Most people reading this already have a building or a lease in mind, and the building line swings the answer by more than everything else combined.

Notes on the equipment line

The production line is where the variables live: which motors, laser-cut moulds or welded, new or second-hand. Second-hand mixers and blenders are viable. Second-hand extruder dies are usually not — a worn die gives you inconsistent density and cracked briquettes, and you will pay for it in rejects for years.

Notes on the ovens

Five ovens is the minimum to avoid a bottleneck at 150 t/month. Ten is comfortable. Below five, drying becomes the constraint on the whole plant, and your production line sits idle.

Oven footprint is about 4 × 5 m each. Budget for burner, blowing fans, heat shielding, temperature regulators, alarms and moisture detectors — the controls are not optional; they are the difference between 3–4% and a container of cracked briquettes.

Notes on the trays

Trays look trivial and are the third-largest CAPEX line.

They must be metal, and they must be flat. A bent tray gives you a bent briquette, and the shape is the product. Trays go into a hot oven for 60–90 hours at a time and degrade fast. Corrosion is a separate problem — rust transfers to the briquette and changes both the ash colour and the taste.

Capacity per tray: 5 kg for cube 25, 3.5 kg for cube 22 or hexagonal. To fill one 5 t oven you need roughly 1,000 trays at Rp 100k each — about $6,000 per oven filled. Multiply by your oven count, then add spares for the shapes you run less often.

Licensing and documents — detail

Item	Cost (IDR)	Cost (USD)	Notes
Company set-up (PT / PT PMA)	Rp 17–34 M	$1,000–2,000	PT PMA required for foreign ownership
Shipping-line factory audit	Rp 17–51 M	$1,000–3,000	MSC $2,000–3,000; Maersk and CMA CGM roughly half
UN-certified packaging number	Rp 35 M	$2,000	Required for your export boxes, per one size. For example 10 kg only
Industrial land conversion	Rp 150 M	$8,800	3,000 m² × Rp 50k/m² — only if not already zoned industrial
Subtotal — land already zoned	Rp 69–120 M	$4,000–7,000
Subtotal — conversion required	Rp 219–270 M	$13,000–16,000

There is no special production or export licence for charcoal. You need a standard company set-up. What you do need, and what people forget, is the shipping-line factory audit — without it your bookings will not be accepted, and the audit takes time as well as money.

Check the zoning of your building before you sign anything. Converting non-industrial land is the single easiest way to add $9,000 and several months to a project that looked ready to go.

Building options — 3,000 m²

Structure	Rate (IDR/m²)	Rate (USD/m²)	Total 3,000 m²	Service life
Bamboo framing	Rp 550,000	$32	$96,000	~10 yrs; fire risk, poor impression on factory visits
Lightweight steel (LGS)	Rp 750,000	$44	Rp 2.25 B / $132,000	Budget option
Structural steel framing	Rp 1.6–2.0 M	$94–118	Rp 4.8–6.0 B / $282,000–353,000	10–15 yrs (Magelang spec)

Rates include construction and concrete floor.

You need separate zones: raw material warehouse, production, packaging, and finished goods storage. Keep packaging and finished goods away from the raw material warehouse, or your printed boxes will arrive at the customer covered in charcoal dust.

On bamboo: it works structurally, and it lasts about ten years. But it burns, and if a buyer flies in to audit your factory, it looks alarming. In a business where the buyer’s whole decision is whether they trust you to load 25 tonnes correctly, the building is part of the sales pitch.

Drying energy — operating cost, not CAPEX

Fuel	Rp / kg	USD / tonne	USD / month @ 150 t
Wood logs	Rp 200	$11.76	$1,765
Electricity	Rp 600–1,000	$35.29–58.82	$5,294–8,824
Gas	Rp 800–1,200	$47.06–70.59

Gas is the most expensive, then electricity, then wood pellets, then wood logs. Cheapest here does not mean worst. With wood logs you can hold heat for a long, slow cycle — 60–90 hours at my Magelang factory — and slow drying is what stops briquettes cracking and splitting.

Gas and electric ovens give you precise temperature control, which is genuinely easier to manage. Then you see the bill.

The delta between gas and wood logs is $35–59 per tonne. At 150 t/month, that is $63,500–106,000 per year — more than the entire oven and tray CAPEX, every single year.

And it compounds: if briquettes come out still wet, you extend the cycle, and every extra hour is more gas or more electricity. An underspecified oven does not just cost you the oven.

Working capital — the number that actually kills factories

Everything above is CAPEX. It is the number everyone asks about, and it is roughly half the money you need.

CAPEX buys you a factory that can produce. Working capital is what lets it produce for the three to four months before a single customer payment reaches your bank. Plenty of well-built plants in Indonesia have gone quiet not because the machinery was wrong but because the owner spent the last of the money on the tenth oven and had nothing left to buy raw charcoal with.

Production line

• rotary kiln (cleaning our charcoal from residue; the longer and bigger it is – better the quality)
• crusher to make charcoal as powder for further mixing (need several mesh)
• Mixers: to mix it with water & tapioca. At least we need 2-3 mixers to keep the production uninterrupted
• Blenders – it is extruders that force-mix our charcoal, heat it up, and make it workable. We need at least 3-5 times to run extruders to get the proper consistency
• Extruders, cutters, conveyor line – where the shape is made, briquettes are cut.
  All equipment needs to be connected to the electric engines, electricity (3-phase industrial-grade) cables, and so on.

Here we have a lot of variables, starting with what engine to use, what molding to use (laser-cut or welded). Also, some machinery we can buy second-hand, some we need to buy new. So, on average, you need from 400 million to 600 million rupiahs for the equipment in total. In USD, based on the exchange rate (as I write this article), Rp 17000 to 1 USD, it becomes 20 to 35 thousand USD.

Drying ovens (not for carbonization)

After we clean, grind, mix, blend, and cut our shisha charcoal briquettes, we need to dry it. Our target moisture of the finished briquette is 3-4% after the oven. During the production process, we have 15-20% of moisture.

Proper drying reduces the risk of cracking and splitting of the briquettes.

Drying is done in ovens. Ovens can be powered by electricity, gas, wood pellets, and wood logs. The most expensive is a gas oven, then electric, and then wood pellets, and the cheapest is wood logs.

But the cheapest does not mean the worst here. As with wood logs, we can heat it for a longer time. For example, at my factory in Magelang, we dry our briquettes for 60-90 hours.

With electric or gas ovens, you can easily manage the temperature, but eventually, you will find that the cost of electricity and gas is too expensive. For example, for 5 tons wood logs oven, you will spend 200 rupiah per 1kg of charcoal, while with gas you need to spend 800-1200 rupiah per 1 kg. It is an additional 50-60 USD per ton to your production cost. For electricity is 600-1000 rupiah per 1 kg, also quite expensive.

What if the briquettes are still wet – need to add more time for drying. More time for drying = more cost for gas or electricity.

Ok, let’s go back to the cost of making the drying oven. We need at least 3 – 5 tons oven capacity. It needs a size of 4×5 meters to accommodate the charcoal. Assume that we will use wood pellets or wood logs. So, we need a wood burner, blowing fans, heat protectors, temperature regulators and alarms, and moisture detectors.

Overall, the drying oven will cost you: aprox 30 million for the burner and 20 million for the walls and other equipment, so the total is 50 million rupiah or 3000 USD per oven.

How many ovens do we need? With a capacity of 150 tons, and one oven capacity of 5 tons and 4 days drying time (do not forget time for loading and unloading the oven, and it really takes time), we need 5 to 10 ovens to make sure we are not having a production “bottleneck”

So total: 30k USD for ovens

Trays

Trays are simple; we use them to put charcoal after cutting. Again, we need very good trays, made from metal, as it should be straight; if it bent, the charcoal also will follow to bent and shape our briquettes will change.
Do not forget that trays are put into the oven and exposit do the high temperatures for a long time, so they will break pretty quickly.
Corrosion is another problem, as we do not want our shisha briquettes contaminated with metal corrosion from the tray, as it changes the color of the ash and taste for sure.

Each tray can carry 5 kg of cube 25. But for cube 22 or hexa, only 3.5 kg. So to fill in a 5-ton oven, we need at least 1000 trays. One tray will cost you 100k rupiah – 6 USD. Total: 6000 USD for trays to fill in one oven. And we have 10 ovens. Plus we need spare trays too if we make hexagonal or other shapes than cubes, and they get broken every 3 months. So the total is 50-60k USD for trays.

Electricity

Yes, we need to install a 3-phase power line from PLN (Indonesian Government-owned electricity company). The transformation cost is 150-200 million rupiah = about 9k USD. Plus cable installation, so it will cost you at least 10k.

Office, Laboratory and other equipment

Ok, we also need packing tables, pallets to store ready goods, bags, and plastic covers. We need an office to arrange accounting, shipping, and other “paper” things. We need toilets, showers for workers, and so on. Assume all of it will cost us about 10-15k USD.
We also need a laboratory with heaters, thermometers, and other equipment to check moisture, carbonization level, and smell level.

Licensing, documents

• There is no special export or production license. You just need a standard company setup (PT or PTPMA for foreign ownership); the cost is 1-2k USD.
• But for export, your factory needs to be verified by shipping lines (get Factory Audit), it will cost you an additional 2-3K USD for MSC, and half price for other shipping lines (Maersk, CMA CGM). It
• Your boxes have to have a UN-verified number; it costs 35 million rupiah (2k USD)
• Important to know if your location is supposed for manufacturing or not. If your factory (building) location is not in an industrial area, you need to convert your land to industrial land, and it can cost you about 50k Rupiah per meter. (Assume you have 3000 meters of area, so you need 10k USD for this).

Building

For 150 tons monthly production, we need at least 2-3 thousand square meters of floor space. Warehouse for raw material, production area, packaging area, and final product storage area. Remember to separate packaging and final product storage from the raw material warehouse; otherwise, your charcoal boxes will be covered with charcoal dust.

On average, if we want to save money, we can use lightweight steel, light gauge steel (LGS). The current price is about 750k (45-60 USD) rupiah per square meter (including construction and concrete floor). If we use steel structural framing (same as we use in Magelang’s factory) it will cost you at 1.6-2 (100-150 USD) million rupiah per sqm, but it can last for 10-15 years.

There is an option to make it from bamboo framing, but again, it is easy to burn down and can stand for 10 years, but the visual view is terrible. If the customer wants to visit your factory, it will look very scary.

Ok, so taking lightweight steel we need at least 3000 sqm x 750k rupiah = 130-150k USD for the building.

CAPEX Summary

Building a 150 t/month coconut shell charcoal briquetting plant in Indonesia costs roughly $112,000–167,000 if you already have the building, and $245,000–300,000 greenfield on owned land.

Then you need working capital on top, and that is the number that decides whether the factory runs.

Three things I would tell anyone starting this:

1. Do not underspend on ovens and trays. They are 40–50% of the equipment budget, and they are what the customer actually experiences, in the form of a briquette that holds its shape and does not crack.
2. Choose your drying fuel on total cost, not convenience. Gas is easier to run and costs six figures a year more than wood logs at this volume.
3. Fund the cash cycle before you fund the tenth oven. You can run at 120 t/month with eight ovens. You cannot run at all with no raw material.

OPEX for Shisha Charcoal Factory

Ok, so building a briquette factory is relatively cheap (well, still 300k), but for the operational expenses it is a very different story. As you already know, the cost of raw material (coconut shell charcoal) is from 60-70% of the total production cost. And we need to pay farmers upfront.

Coconut shell is collected (mostly) from farmers in remote regions, and they (farmers) will not wait or allow you to delay payment. Unless you are working with “pengumpul” charcoal collectors, who collect and accumulate charcoal from several villages. But again, they will not be happy if you postpone their payment too.

The other option is to take coconut shells from coconut milk/water/desiccated coconut factories. For those factories, coconut shell are waste (but it is often used as fuel for the ovens). So, yes, it is possible to buy with postponed payment.

Let’s assume the charcoal cost is 1500 USD per ton, so at least 1000 USD you need to pay upfront to get the raw material. Then you have to wait for its arrival at the factory. Let’s say shipping from Sulawesi to Surabaya is 15 days, and tracking additional 3 days. So here you get 20 days delay, and you have already spent 70% of the goods’ cost.

Then you need to do printing of the boxes – it also costs you money upfront.

So basically, you need to be paid one week after charcoal production, and production itself will take 4 weeks, so we have 5 weeks + 20 days (delivery of raw material). In total, 8 weeks; you free almost all the money. 25 tons x 1500 USD = 37500 USD x 8 weeks = 300,000 USD just to keep running without cashflow problems.

In my experience, you need at least 500-600k USD to run 150 tons per month without getting into cash flow problems.